Editor's Note: The original title was "Opinion: Digital RMB Ushers in Golden Stage, Blockchain Can Turn Crisis into Opportunity"
Last week, perhaps this was the innumerable number of times. The Central Bank of China expressed its support for the issuance of the national digital currency. On April 4, at the 2020 national currency gold, silver and safe work video conference call, the People's Bank of China said it would further "prioritize" the digital yuan.
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The Chinese government document pointed out: “Since the new coronary pneumonia epidemic, the relevant parties have strengthened the management of cash supply and circulation of cash and security systems to ensure the safety of cash supply and use.” The document also pointed out that “the meeting requires cash and The security system should be guided by General Secretary Xi Jinping ’s new era of socialism with Chinese characteristics ”,“ Continue to deepen the transformation of the cash and securities business. ”
"Promote legal digital currency"
The first of the many goals listed at the Bank of China meeting is to "strengthen the top-level design, unswervingly advance the research and development of legal digital currency, systematically promote the reform of the cash issuance and recycling system, and accelerate the promotion of banknote processing Business, issuing bank guards and issuing funds. "
This is somewhat different from the Chinese government's previous explanations about this upcoming digital currency. This statement is more confident than ever, and it also indicates that perhaps the digital RMB plan has entered a stage of rapid development.
Why is it now?
The new crown virus has become a digital catalyst. In the face of the unexpected corona virus crisis, the digital yuan is likely to be launched sooner than expected. One potential use case is China ’s new coronary pneumonia pandemic disaster relief stimulus plan, which is a $ 3.6 trillion infrastructure stimulus plan. This is not the first time China has launched a large-scale stimulus plan. The last time it happened in 2008, many people praised China for supporting itself and the world economy during the economic downturn.
However, it turns out that how to spend these trillions of dollars in this vast country is a challenging task, and it is very likely that funds will be misallocated. However, with the digital renminbi, people can closely monitor the use of the new stimulus plan on the database. If there is abuse, the central government can immediately detect violations and punish bad actors.
Is China's blockchain ready for prime time?
So, are blockchains with Chinese characteristics ready? In the past five years, the Chinese government has rarely disclosed information about its design. We know that the system will be a closed, licensed database, integrated with commercial banks and even potential fintech giants, but its design is still advanced.
There are many articles on the two types of blockchains that will be adopted by governments and companies worldwide in the coming years. One is a wild and free, permission-free blockchain—an anarchist's dream, free from supervision and supervision, and open to everyone. The other is a licensed proprietary blockchain, which is centrally controlled and supervised, and is able to track all transactions and record all time transparently.
As far as the new crown virus rescue plan is concerned, the injection of US $ 3.6 trillion is a huge M2 supply shock. Compared with the US method of distributing money directly to households, the Chinese method is different. In this place, permissioned blockchain will greatly improve process transparency. First, the blockchain will only accept qualified suppliers, and no external party can use the bailout funds. Second, the central government can instruct provincial and municipal governments to activate their respective nodes and report their budgets and expenditures in real time. Due to network congestion issues, it may be difficult to use a Western unlicensed blockchain. However, the centralized blockchain will not have such problems. Therefore, the digital RMB will become a monitoring system to prevent local governments from abusing their power.
Of course, there is no perfect blockchain solution. But at a time like the current pandemic, relying on a technology that provides structure for actual use cases can bring some comfort to society. China can easily turn this crisis into an opportunity.